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F&C rocked by pensions defections

The UK's fourth largest fund manager, F&C Asset Management, will slash its dividend and take a substantial hit to its profit in the next few years as it suffers an exodus of pension fund business.

F&C's shares fell 18% to 170.75p after the company said large pension fund customers in Holland were taking their business elsewhere.

F&C's shareholders have become increasingly concerned in the past few months as Dutch pension fund trustees have been swapping away from using one asset manager for their whole pot to splitting the money up between several fund managers.

The cut would allow F&C to boost capital investment in new products, sais Alain Grisay, chief executive, confident that more value for shareholders would be created in the long term. The dividend at its present level costs the company Â£53m (â‚¬79.8bn) a year.

F&C plans to go on a hiring spree to bring in talent to manage new products, including single-strategy hedge funds. It aims to multiply its Â£1.3bn of hedge fund assets several times over.